Income Tax Dept to prosecute 300 out of 627 people; probe panel to submit its report in one month
With the Centre on Wednesday submitting a list of 627 Indians having accounts in HSBC Bank, Geneva, the Supreme Court (SC), hearing the black money case, set the Special Investigation Team (SIT) hot on their trail fixing a one-month deadline for the probe panel to submit its report. The SC had on Tuesday directed the Centre to submit the entire list of names.
In a related development, the Income Tax Department is also likely to initiate prosecution against close to 300 people whose names were submitted to the SC on Wednesday.
Officials said the department has informed the SIT, constituted to go into the issue, to allow it to start the “first step of prosecution” under two Sections of the Income Tax Act.
Prosecution is being sought under Section 277 (false statement in verification) and 276 D (failure to produce documents) so that the department can share information with other enforcement agencies like the ED and CBI, they said.
The sources said the department has already realised `200 crore in taxes and penalties from some of these account holders who have accepted holding these accounts abroad. There could be another
`200 crore to `300 crore in taxes and penalties that could be realised from the others, they said.
“The list of 627 Indians submitted to the apex court on Wednesday has close to 300 people against whom prosecution action can be launched soon. Basic prosecution, at least under select sections of the I-T Act. While some 120 cases are already under prosecution these fresh individuals and entities can also be booked based on prima facie evidence gathered by tax sleuths,” sources said.
Earlier, in the day Attorney-General Mukul Rohatgi, who handed three sets of documents in a sealed cover to the SC, said that “less than half” of the 627 people named in the list were residing in India against whom investigation is either pending or complete for transactions made between 1999 and 2006.
Besides the raw list supplied by France in 2011, the sealed cover contained communication exchanged between Indian and French authorities and a status report of SIT dated June 27, 2014.
The AG pointed out that ever since the Government received the information in July 2011, the account holders residing in India were contacted by the Income Tax authorities as any tax to be raised against the transactions had to be done before March 31, 2015. “Some have admitted they have these (bank) accounts and they will pay taxes while investigation is going on against some,” Rohatgi said.
Without opening the cover, the Bench, headed by Chief Justice Hl Dattu, directed the SC Registry to hand it over to a responsible person in the SIT with a strict instruction that nobody other than the Chairman Justice MB Shah or Vice-Chairman Justice Arijit Pasayat shall open it.
“We permit the SIT to proceed with the matter in accordance with the law and evolve its own procedure after hearing the Attorney-General or his representative and Ram Jethmalani (petitioner) or his counsel,” said the Bench, also comprising Justices Ranjana Desai and Madan lokur. Since the SIT also has heads of CBI, Enforcement Directorate, DRI, Income Tax and Intelligence wings as members, the court left it to the SIT to either probe on its own or hand over the papers to the CBI, ED or Income Tax Department. In any event, the SIT will have to submit a status report to the court latest by November 30. The court will take up the report on December 3.
Meanwhile, on a day when the Central Government submitted the list to the SC, head of the SIT probing the case Justice MB Shah said that there were no new details in the report that has been submitted by the Government. “I don’t think there is anything significant in the report. The list is the same as before. It was known to us. We have to question the people in the list,” Shah said adding that there is no new outcome of the investigations that have taken place in the past few days.
He also said that all the facts in the report were already known to the SIT. “All these facts that have been revealed were already known to the members of SIT. We should be able to file a satisfactory report in time,” he added.
The Centre did not press its application further for clarification intending to protect genuine account holders from future disclosure. The AG admitted that filing the application was a “misunderstanding” even as the court allowed the Centre to seek any clarification from the SIT on signing of bilateral and multi-lateral information exchange treaties requiring India to give an undertaking to protect the privacy of genuine account holders.
Explaining the reason why it called for the list of names, the Bench told the AG: “The problem started because you came out with this application. We have placed faith in the SIT. They are authorized by us to investigate on black money. If you had told them of these consequences, they would certainly understand. After all, they are not laymen.”
Rohatgi informed the court that the urgency was due to a treaty which India has to sign with the US before December 31 that will provide a host of information with regard to black money kept by Indians residing in America. The conclusion of these treaties would allow the Indian Government and businessmen to get an exemption of 30 per cent tax known as withholding tax charged on every remittance from US to India, be it of currency or commodities. The RBI Governor had apprised the Government of this concern, the AG said, reiterating that the Government had no intention to either protect or hide any name. The court had on Tuesday accused the Centre of holding a “protective umbrella” against some names in the list wondering how the Government was investigating the culpability of people when the task was left exclusively to the SIT.